Northern Pac Ry Co v. State of North Dakota Langer

• Citation: 63 L.Ed. 897,250 U.S. 135,39 S.Ct. 502
• Decision Date: 02 June 1919
• Docket Number: No. 976,976
• Parties: NORTHERN PAC. RY. CO. et al. v. STATE OF NORTH DAKOTA ex rel. LANGER, Atty. Gen
• Court: United States Supreme Court

250 U.S. 135

39 S.Ct. 502

63 L.Ed. 897

NORTHERN PAC. RY. CO. et al.

v STATE OF NORTH DAKOTA ex rel. LANGER, Atty. Gen.

No. 976.

Argued May 5, 1919.

Decided June 2, 1919.

Messrs.John Barton Payne, of Chicago, Ill., and Charles Donnelly, of St. Paul, Minn., for plaintiffs in error.

Messrs. Frank E. Packard, of Bismarck, N. D., and W. V. Tanner, of Olympia, Wash., for defendant in error.

[Argument of Counsel from pages 136-141 intentionally omitted] Mr. Chief Justice WHITE delivered the opinion of the court.

In taking over the railroads from private ownership to its control and operation, was the resulting power of the United States to fix the rates to be charged for the transportation services to be by it rendered subordinated to the asserted authority of the several states to regulate the rates for all local or intrastate business, is the issue raised on this record. It arises from the allowance by the court below, of a peremptory writ of mandamus commanding the Director General of the railroads, appointed by the President, and the officers of the Northern Pacific Railway Company to desist from charging for transportation in intrastate business in North Dakota the rates fixed by the United States for such services. When this command was obeyed, the mandamus ordered that the Director General should thereafter exact for the services stated only lesser rates which were fixed in a schedule on file with the State Utilities Commission prior to the bringing of suit and which rates under the law of North Dakota could not be changed without the approval of the Utilities Commission. In the opinion of the court below it was stated that all the parties admitted that there was no question as to the jurisdiction to consider the controversy and that they all also agreed that no contention was presented as to the power of Congress to enact the law upon which the controversy depended, as the correct interpretation of such law was the only issue to be decided. We consequently put those subjects temporarily out of view. We say temporarily, since even upon the assumption that issues concerning them necessarily inhere in the cause and cannot be waived by the parties, we could not decide concerning such issues without interpreting the statute, which we proceed to do.

On the 29th of August, 1916 (39 Stat. 645, c. 418 [Comp. St. § 1974a]), Congress gave the President power, 'in time of war, * * * to take possession and assume control of any system or systems of transportation, or any part thereof, and to utilize the same, to the exclusion as far as may be necessary of all other traffic thereon, for the transfer or transportation of troops, war material and equipment, or for such other purposes connected with the emergency as may be needful or desirable.' War with Germany was declared in April, 1917, and with Austria on December 7th of the same year. 40 Stat. 1, c. 1; 40 Stat. 429, c. 1. On December 26, 1917, the President, referring to the existing state of war and the power with which he had been invested by Congress in August, 1916, proclaimed that——

'Under and y virtue of the powers vested in me by the foregoing resolutions and statute, and by virtue of all other powers thereto me enabling, [1] do hereby * * * take possession and assume control at 12 o'clock noon on the 28th of December, 1917, of each and every system of transportation and the appurtenances thereof located wholly or in part within the boundaries of the continental United States and consisting of railroads, and owned or controlled systems of coastwise and inland transportation, engaged in general transportation, whether operated by steam or by electric power, including also terminals, terminal companies and terminal associations, sleeping and parlor cars, private cars and private car lines, elevators, and warehouses, telegraph and telephone lines, and all other equipment and appurtenances commonly used upon or operated as a part of such rail or combined rail and water systems of transportation, to the end that said systems of transportation be utilized for the transfer and transportation of troops, war material and equipment, to the exclusion so far as may be necessary of all other traffic thereon, and that so far as such exclusive use be not necessary or desirable such systems of transportation be operated and utilized in the performance of such other services as the national interest may require and of the usual and ordinary business and duties of common carriers.' Comp. St. 1918, § 1974a.

By the proclamation a Director General of Railroads was appointed with full authority to take possession and control of the systems embraced by the proclamation and to operate and administer the same. To this end the Director General was given authority to avail himself of the services of the existing railroad officials, boards of directors, receivers, employes, etc., who were authorized to continue to perform their duties in accordance with their previous authority 'until and except so far as such Director shall from time to time by general or special orders otherwise provide.' Limited by the same qualification the systems of transportation taken over by the government were made subject to existing statutes and orders of the Interstate Commerce Commission and to all statutes and orders of regulating commissions of the various states in which said systems or any part thereof might be located. In addition, however, to the limitation previously stated the proclamation in express terms declared:

'But any orders, general or special, hereafter made by said Director, shall have paramount authority and be obeyed as such.'

The proclamation imposed the duty upon the Director General to negotiate with the owners of the railroad companies for an agreement as to compensation for the possession, use and control of their respective properties on the basis of an annual guaranteed compensation and with reservations in the interest of creditors, bondholders, etc. The proclamation in concluding declared that——

'From and after twelve o'clock on said twenty-eighth day of December, 1917, all transportation systems included in this order and proclamation shall conclusively be deemed within the possession and control of said Director without further act or notice.'

Carrying out the authority exerted by the proclamation, the railroads passed into the possession, control and operation of the Director General.

On March 21, 1918 (Act March 21, 1918, c. 25, 40 Stat. 451 [Comp. St. 1918, § 3115 3/4 a]), dealing with the subject Congress passed a law entitled:

'An act to provide for the operation of transportation systems while under federal control, for the just compensation of their owners, and for other purposes.'

The opening sentences of the act declared:

'The President, having in time of war taken over the possession, use, control, and operation (called herein federal control) of certain railroads and systems of transportation (called herein carriers), is hereby authorized to agree with and to guarantee to any such carrier making operating returs to the Interstate Commerce Commission, that during the period of such federal control it shall receive as just compensation an annual sum, payable from time to time in reasonable installments, for each year and pro rata for any fractional year of such federal control, not exceeding a sum equivalent as nearly as may be to its average annual railway operating income for the three years ended June 30, 1917.'

Without going into detail it suffices to say that the first eight sections of the act comprehensively provided for giving effect to the purposes just stated and in a general way contemplated affording what was deemed to be just compensation to the owners for the use of their property. In addition it empowered agreements in the interest of security holders of the railroads and sanctioned provisions deemed fair to the United States and to the owners of the property for betterments which might be required to be made during the term of control and for the return of the property when the government possession came to an end, which return was to be accomplished within a stated period after the cessation of war by the proclamation of the ratification of a peace treaty.

Beyond doubt also, for the purpose of enabling the United States to perform the obligations which it assumed and to secure it from ultimate loss from the pecuniary responsibilities which might result, including the repayment to it of an appropriation of $500,000,000 which the act made applicable, all the earnings of the railroads were by the act expressly made the property of the United States.

The remaining eight sections of the act need not be stated; but as section 10 (Comp. St. 1918, § 3115 3/4 j), which expressly provides for the power to fix rates, and section 15 (Comp. St. 1918, § 3115 3/4 o), making certain reservations concerning the powers granted, were greatly relied upon in the opinion below and in the argument at bar, we reproduce in the margin the more relevant portions of section 10 and the text of section 15.¹

On May 25, 1918, the Director General made an order establishing a schedule of rates for all roads under his control and covering all classes of service, intrastate as well as interstate. The order made these rates effective on designated dates in the month of June and they were continuously enforced during a period of about eight months up to the 14th of February, 1919, when the bill in this case was filed by the State Utilities Commission for mandamus against the Director General and the officers of the Northern...